Health-Functional Foods in Foodwebs : Developing Products in Food Specific Networks

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University of Helsinki

Department of Economics and Management Publications No 30, Food Economics

Helsinki 2001

Jarmo Markula

Health-Functional Foods in Foodwebs

Developing Products in Food Specific Networks

Helsingin yliopisto, Taloustieteen laitos Julkaisuja nro 30, Elintarvike-ekonomia

Helsingfors universitet, Institutionen för ekonomi Publikationer Nr 30, Livsmedelsekonomi

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Acknowledgements

I would like to thank all those persons and organisations who have made this research possible. Even though there is only one name on the front page, in fact it has been a network assisting the completion of this study.

Particularly, I want to thank all the interviewees for their time and efforts, which have made this study possible. There are also many industry and research representatives as well government officials who made valuable contributions and are appreciated for that.

I wish to thank Dr. Sirpa Tuomi-Nurmi for her patient and sympathetic attitude towards the research efforts that took ever more time and towards results that seemed somewhat obscure in the first place. Many thanks also to Dr. Ahti Lehtomaa whose influence en- abled the research to finally find the right path and Professor in Food Economics Markku Koskela who has always been ready to assist in the completion of the research. All the members within Food Economics have also been very supportive and understanding during the research period and deserve warmest thanks for that.

I am grateful for the financial aid received for the study from the foundation of Liikesi- vistysrahasto.

Kindest thanks also to my wife Eeva and children Nelli and Niklas who have been forced to tolerate an absent minded husband and daddy who sat for hours and hours at the com- puter with a pile of papers without accomplishing anything in a very concrete sense

Helsinki, April 2001 Jarmo Markula

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University of Helsinki

Department of Economics and Management Publications No. 30, Food Economics, 2001, 146 p.

________________________________________________________________

Health-Functional Foods in Foodwebs

Developing Products in Food Specific Networks Jarmo Markula

Department of Economics and Management P.O.Box 27

SF-00014 University of Helsinki

Abstract. A new category of health-promoting foods has emerged on food markets. This study examines the background of the development of the products that belong to this category. It aims for a more holistic view to the subject area than what has been typical in the previous studies. The key framework used in the study, the foodweb, is based on the model of industrial networks. The model is adapted for the purposes of this study.

The study has an empirical basis. Product related cases are examined. These five Finnish cases are: Benecol, Hyla, LGG, Xylitol, and Yosa. The study is mainly based on findings made from these cases. Some aspects of the international markets are also brought up.

It was found that this new food product category has brought with it many new questions that previously have not been of major significance in the food context. The basic characteristics of foods and the relationships of health-promoting foods with other product categories were examined under a new framework for foods: body-centred foods. It was observed that foods are linked to different body linked purposes under which foods can be functional. Health-functionality is one of the respective functionalities.

Empirical development processes described using the foodweb as conceptual framework showed the interdependency of the development process from many activities, actors, and resources that usually cannot be captured if the development is viewed from a single organisation point of view. It also seemed that development of these products is a multi- layered process of many concurrent and sequential interactions.

There are many obstacles within food system that hinder the development processes of these specific foods. There are many unresolved questions and questions that have not yet explicitly been asked that have to be encountered before it is relevant to expect goal oriented smooth development processes for health-functional foods.

Keywords: functional foods, new foods, food and health, food product development, product cases, industrial networks, food economics, food markets, food marketing _______________________________________________________________________

ISBN 951-45-9951-9 (PDF)

ISBN 951-45-9923-3 (Paperback) ISSN 1235-2241

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2.1.2. Functionality and body-centred foods 25 2.2. Health-functional foods in an empirical context 30 2.2.1. Emergence of the product category 30 2.2.2. Characteristics of health-functional foods 31 2.2.3. Validation of health-functional foods 33 3. Foodwebs – a framework for studying the product development 35

3.1. Industrial networks 35

3.1.1. The background of the industrial networks 35 3.1.2. Structure and processes of industrial networks 37 3.2. From industrial networks to a foodweb 39

3.2.1. A change in the perspective 39

3.2.2. Properties of a foodweb 41

4. Empirical part of the study 44

4.1. Case study method 44

4.2. Selection of the cases and broadening the information basis 45

4.3. Data collection and analysis 47

4.4. Questions of validity and reliability 49

5. Health-functional foodstuffs - five cases 51

5.1. The case of Xylitol 51

5.1.1. Background of the health-functionality 51 5.1.2. Periods in the development of xylitol products 51

5.1.2.1. Complementing triad 51

5.1.2.2. Push by experts 52

5.1.2.3. Loss of safety image 53

5.1.2.4. Consumer commitment 54

5.1.3.5. Global orientation 55

5.1.3. Identification of the respective foodweb 56

5.1.3.1. Actors 56

5.1.3.2. Activities 57

5.1.3.3. Resources 58

5.1.3.4. Development dynamics 59 5.1.4. Conclusions drawn from the case 60

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5.2.1. Background of the health-functionality 61 5.2.2. Periods in the development of Hyla products 61

5.2.2.1. Technological choices 62

5.2.2.2. Internal uncertainty 62

5.2.2.3. Generic brand 63

5.2.2.4. New technology 64

5.2.3.1. Actors 64

5.2.3.4. Development dynamics 66

5.2.4. Conclusions drawn from the case 67

5.3. The case of LGG 68

5.3.1. Background of the health-functionality 68 5.3.2. Periods in the development of LGG products 69 5.3.2.1. Purposeful research and expert involvement 69

5.3.2.2. A slow start 69

5.3.2.3. Aggressive marketing 70

5.3.2.4. Business-to-business internationally 71 5.3.3. Identification of the respective foodweb 71

5.3.3.1. Actors 71

5.4. The case of Yosa 75

5.4.1. Background of the health-functionality 75 5.4.2. Periods in the development of Yosa products 76 5.4.2.1. Development of the product idea 76 5.4.2.2. The search for an industrial partner 76 5.4.2.3. Emphasis in process development 77 5.4.2.4. Distribution barriers and media push 78

5.4.2.5. Learning about consumers 79

5.4.3.1. Actors 79

5.5. The case of Benecol 83

5.5.1. Background of the health-functionality 83 5.5.2. Periods in the development of Benecol products 83 5.5.2.1. Search for complementary partners 84

5.5.2.2. A technological solution 84

5.5.2.3. Path to product approval 85

5.5.2.4. Launch without introductions 85 5.5.2.5. The product leading the company 87 5.5.3. Identification of the respective foodweb 88

5.5.3.1. Actors 88

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5.5.4. Conclusions drawn from the case 91 6. Foodweb of the health-functional foods - a broader perspective 93

6.1. Structural properties of the foodweb 93

6.1.1. Foodweb activities and activity patterns 93 6.1.2. Foodweb actors and actor coalitions 96 6.1.3. Foodweb resources and resource constellations 100

6.2. Product development in the foodweb 103

6.2.1. Choice of initial product characteristics 104

6.2.2. Formation of product barriers 106

6.2.3. Product related communication 108

6.2.4. Progress of product design 112

6.3. Change in the development environment 115

6.3.1. Change factors 115

6.3.2. Dynamics in change 121

7. Discussion 123

7.1. Conclusions from the study 123

7.2. Practical implications 130

7.3. Applicability of the foodweb in food contexts in general 133

7.4. Suggestions for further research 135

Summary 137

References 139

Appendices 145

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1. Introduction

1.1. Health-promoting foods – a new research approach is needed

A new category of health-promoting¹ foods has emerged on food markets². Even though it can be said that all foods promote health, the market segment is characterised by a more specific orientation to health subjects than has been typical in food context. It has been cautiously³ estimated that the market value of this category would in Europe be US$ 2.5-3.3 billion by the year 2003 (Hilliam 1998). When divided by the population of the EU countries (~ 300 millions), it would mean that by that time every European consumer would spend approximately 8-11 euros yearly on these specific foodstuffs. This would still be a small share of the total per capita expenditure on foods.

What characterises these new products? They could be considered as high-technology products because often there are links to new technologies. However, technology, even in its broadest sense, would probably give a wrong image of the product group as a whole.

It is not the technology but the effect of foods on bodily health that matters. If a simple label would be needed as a sign of the modernity of these foods, it could be something like high-health foods.

What is the research base of the new growing market segment? Most of the scientific research concerning these foods has taken place within the natural and technological sciences. In Finland alone scientific research in this area is being done in several institutions and a considerable amount of resources are being allocated to the research. Much less resources are being used to study the new market segment within the sciences of applied economics and management.

There is an economics and management based study field that has a specific focus on foods. It consists of subjects such as food economics, food business, food (industry or service) management, and food marketing. Even within this area of research there are not many studies concerning the new market segment. There are a few studies where pro- duction point of view has been chosen (e.g. Göransson and Kuiper 1997). In most studies concerning the phenomenon a consumer point of view is the dominant one (e.g. Poulsen 1999, Morten and Beckman 1998). A more holistic view to the subject area is missing.

Another gap in the current research is evident as an attempt is made to position the health-promoting foodstuffs within foods in general. It concerns the essence of foodstuffs themselves. There are studies that describe the emergence of traditional foods from a historical point of view (see e.g. Mennell 1986) or foods from a nutrition policy point of view (e.g. Mennell et all 1992). There is however no such a framework that would make it possible to position the new health-promoting foodstuffs within the context of modern foods. Food-as-a-commodity approach or from-medicines-to-foods -dimension are not very helpful in this respect.

Besides foodstuffs themselves, another question concerns the context of these new foods.

How should they be described and conceptualised? This is an important subject because it is difficult to understand these new products if they are isolated from their context.

1 Health-promotion means here a specific positive effect of a foodstuff on health of a human body

2 Food markets refer to the price-valued exchanges of foodstuffs in general.

3 Harkki & Miller (1997) estimated US$ 3-10 billion by the year 2001.

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Given the background of the study, it would appear natural to assume that foodstuffs are considered as products on markets. This was an approach used in the beginning of the introduction as estimates were given concerning the expected price-values of products on the markets in the near future.

However, there are reasons why a market approach may not be the best alternative. In the following a very narrow and simplified picture of the relationship between a product and a market is given. It is assumed that it corresponds sufficiently to a general idea of markets. The problem here is that although the same concept –market- is used, the content given to them varies in different disciplines. Markets in economics⁴ has not necessary the same content as markets, for example, in marketing science.

A common starting point for markets in economics is to assume that products already exist. Values and respective volumes of products are emphasised. Given a certain price an optimal product volume can be determined. The development of products is not an issue compared to these. If exchange phenomena is at the forefront in marketing science, the relationship aspects are emphasised (see e.g. Easton and Araujo 1994, Houston and Gassenheimer 1987, Bagozzi 1975). This can be interpreted to mean that products are simply caused by relationships. As soon as there are relationships there are also products.

Products do not have any independent role and the development of products is subordinate to the development of relationships.

In case of health-promoting foodstuffs the situation is different. There are exchangeable products not only on a limited scale but also on a limited scope. There are, however, expectations of utilities of future products. This means that product development aspects are emphasised. Products are not hidden in general relationships but there are special relationships based on these expectations. Both the above mentioned starting points do not adequately take these aspects into consideration. They emphasise other aspects than those that are important in development of health-promoting foods.

There is also a question of who are the relevant actors in markets. According to one widely respected view market products are bundles of attributes (Lancaster 1966). Those bundles are typically linked to two types of actors in the markets: firms and consumers.

The role of a firm has traditionally being emphasised. A firm is an interpreter of consumer needs and actually a maker of a product. The development of a product in turn takes place inside a firm before it is launched to markets.

A different approach is to consider products as services. In that case both a firm and a customer concurrently develop and make the product (see e.g. Glynn and Lehtinen 1995, Grönroos 1990). From the traditional exchange point of view it either means that there are no market partners until an exchange takes place or that there are many exchanges (and market partners) and a product emerges gradually. In the former case the development of a product does not take place in markets. In the latter case the assumption of a single product corresponding to a single exchange is not valid as a service product consists of several marginal products.

4 ” A market is an arrangement by which buyers and sellers of a commodity interact to determine its price and quantity.” (Samuelsson 1989,39)

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What is typical both in traditional and service market approaches is that the producer- consumer axis is emphasised. In the case of health-promoting foodstuffs it is however not necessary realistic to assume that this dyad can decide all the characteristics of a product.

If product development is for example based on many separate exchanges between a producer and a customer it could also be thought that in-between these exchanges there are exchanges with other actors that are of relevance from a development point of view.

There is also a question related to positions of actors in markets. In imperfect markets it can be assumed that there is a market space where actors locate on vertical and horizontal dimensions. Horizontal positions could be linked to product substitution and vertical positions to value differences in products. As the interest is especially in the development of a product, vertical dimension is of special interest. It can be assumed that there is a vertical chain linked to a certain product in which different actors perform different tasks that add to the market value of a product. This chain can be called a value chain of a product.

There is a special model, called the food chain, that has been used as a descriptive framework in food systems (see e.g. Street 1990, Spedding 1989). The idea of a food chain has close relationship with vertical market relationships. Vertical arrangements are basically the business arrangements between buyers and sellers. These relationships are often said to be between upstream parties, such as the original producers of goods, and downstream parties, meaning final users or distributors (Azzam and Pagoulatos 1999).

The food chain can also be linked to the idea of a supply chain, which is a term used very often in technological contexts (see e.g. King and Phumpiu 1996).

The basic simple food chain (Figure 1) can be considered to be a representation of a product based view as a product has an important role in it even though it is not a part of the explicit structure. To a large extent the product defines the links and relationships between actors. It can be said that the food chain is a specific food product based gover n- ance form.

Farmers Food manufacturers Wholesalers/Retailers Consumers

Foodservices

Figure 1. The traditional basic food chain

What makes a food chain different from a value chain of a product is that a food chain is based on technical changes taking place in a food product as all the actors in the food chain are specialised to certain technologically differentiable operations. In the market context it is the change in market value that is of importance. When it comes to the development of health-promoting foods it is realistic to assume that both market value and technological aspects direct product development. Simple market value can not capture all the development aspects.

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The food chain model has weaknesses when it comes to the description of the development of health-promotional foodstuffs. There are at least two issues. Firstly, to what extent it is valid to link the development of products to such a predetermined order of infl u- ence by certain actors as the food chain model describes? Are all these actors influential only at one single phase as the products are being developed? Secondly, for the health- promoting foodstuffs it is also questionable whether the above mentioned actors are the only important ones. It would seem more reasonable to assume that it is difficult to an- ticipate who are the actors and in which order they contribute to the development of a product. The more turbulent and changing is the food context the more there are uncertainties. In such a situation it is not realistic to fix these variables in advance.

What has been typical in food context is that the depth of product development process has not typically been very deep, if deepness is measured by the extent of how much foods are altered in a material sense. In most cases product development has meant only small incremental changes. Changes have commonly taken place within those characteristics of a product that can be linked to the variability seeking behaviour of consumers (see e.g. Kujala 1994). This tendency to incremental development is also evident as the product development process in food context is described (see e.g. Graf and Saguy 1991). In general product development is described as taking place on a relatively short- term basis in a context dominated by a single organisation (see e.g. Urban et.al. 1987).

This is typical even in those cases where the multifunctional approach is emphasised (see e.g. Jones 1997). There are some studies where a more long-term perspective on product development is prevalent (see e.g. Utterback and Abernathy 1975, Lindman 1997).

When product development is linked to more radical changes the situation is different.

There are reasons to expect that for health-promoting foods in many cases it is a matter of more innovative products⁵. In such cases it is not relevant to focus only on direct producer-consumer relationships. There are probably also other parties involved. This is not contrary to the view that it is ultimately consumers who decide whether a development process is successful. It means that direct consumer influence does not extend over the whole development process. It is also relevant to assume that the early stages in the development of such a food product are important because they will to large extent estab- lish the basis for a consumer product.

Especially in case of more radical changes the development process can be thought to initially take place between few key actors. In this sense the situation is actually closer to a situation where a small amount of independent partners interact together than to a situation where there is a single organisation and a large number of individual consumers. It is also probable that the former contains links that are typical for industrial and inter-organisational relations.

An environment where the traditional firm-consumer based view is a too limited cluster type of an approach has also been used. Clusters contain elements (e.g. non-profit organ i- sations, knowledge as resource) that have not traditionally been included in market types of frameworks. Clusters have typically a strong national or geographical basis (see e.g.

Porter 1998). Usually they are used to describe very general potentialities. They have not usually been applied to specific product contexts and their analytical structure is not usually very well suited to that.

5 Something that is innovative introduces changes and new ideas in the way things are done or made (English Language Dictionary 1987)

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Based on the different aspects mentioned above it can be concluded that all the treated frameworks seem to have deficiencies when used in description of development of health-promotional foodstuffs. In search of a new framework a relatively new industrial networks⁶ based approach was found. Use of network structure and processes as a conceptual framework has became popular in studies of industrial markets (see e.g. Back- haus and Büschken 1997, Möller and Wilson 1995, 605). The relationship between the network approach and the traditional industrial market approach could be described as complementary and not substitutive.

The network based approach is promising as different aspects of the context of health- promotional foods are taken into consideration. Industrial networks are linked to the market context but without the often very demanding assumptions of the more traditional market approaches. It can be thought that in the network context also the development of a product and not only the exchange of a product are of significance. Networks also use a multi-actor perspective, which is not limited to chain-of-actors types of constellations.

The framework that is used to describe the food context could be called food networks.

However, in this study there is more emphasis on the context – specific food context - of the network than on the network itself. It is thought that the use of a web as a central concept would better reflect this aspect. For these reasons the framework which is used to describe the context of health-promotional foodstuffs is generally called a foodweb.

1.2. Objectives and the scope of the research

It is assumed that health-promotional foods have brought with them problems and questions, concerning the development of food products, which go beyond those in traditional food product development. This has implications in the determination of the objectives and the scope of the research. There is a need to go deeper into problems than has been typical in the food development context and also to explore the subject from a more holistic perspective.

1.2.1. Research objectives The objectives of the study are:

* to position health-promoting foods within foods in general

* to describe the empirical development process of health-promoting foods using the foodweb as a conceptual framework

* to increase understanding of the underlying problems in the development process, specifically of those which are new in the food development context.

* to explore the properties of the foodweb in the context of health-promoting foods.

6 ”Networks” have meant exchange relations, in which a change in one relation affects other relations.

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These objectives lead to a set of questions that need to be answered:

1. How do health-promoting foods relate to other foods?

In this study health-promoting foods and the context from which they emerge are a key starting point. There is a need for evaluation of foods to the extent that health-promoting foodstuffs can conceptually be positioned in relation to other foods

2. What are the properties of a foodweb as a holistic development framework?

The foodweb as a framework is based on the model of industrial networks. It is adjusted in order to make possible an analytical approach in which the emphasis is on development of food products. Development is not restricted to the traditional prior to the market phase but is assumed to continue as the products enter the markets. A foodweb is more than just a metaphor but less than a parametric or ideal model. The empirical fit of the framework is considered to be more important than the theoretical coherence within the framework itself.

3. What kind of special problems are countered as development of health-promotional foods takes place in empirical context? It is expected that the special nature of these products cause problems that are new in the food development context.

4. What kind of initial generalisations concerning the respective foodweb can be made based on empirical findings? There are not many studies concerning the development process of health-promoting foods. It is expected that empirical findings can lead to initial generalisations concerning the foodweb in general.

1.2.2. Scope of the study

Food phenomena are very complex and linked to different kinds of questions. This is even more so when it comes to a new context integrated by health-promotional foods. In this study a broad perspective is chosen when it comes to the background of foods. Ref- erences are made to research done in many areas both in the social and natural sciences.

Industrial networks create a basis for the framework of foodwebs. Industrial networks here refer more specifically to the so-called Uppsala school of networks (Tikkanen 1997,14). The perspective in network studies is broader than in many other traditional subjects within the field of economics and management. This means that also the context of foods will be seen from a broad perspective where different economics, marketing, and management related subjects are being confronted.

The scope of the empirical study is limited to the Finnish context when it comes to the selection of primary sources. The limited resources available restrict the scope and the depth of the empirical study. The study is not part of any research programme; it repre- sents a one-man-one-study approach.

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1.3. Methodological questions and structure of the study

1.3.1. Qualitative research as a starting point

Scientific research can be divided into two main categories: qualitative and quantitative research. Qualitative research tradition originates from criticism raised by the social sci- entist towards the basic assumptions of the positivistic sciences (Creswell 1994, 4). Cur- rently qualitative research consists of a very heterogeneous research base. Denzin and Lincoln (1994, 2) define qualitative research in the following way: “Qualitative research is multimethod in focus, involving an interpretative, naturalistic approach to its subject matter. This means that qualitative researchers study things in their natural settings, at- tempting to make sense of, or interpret, phenomena in terms of the meanings people bring to them.”

Creswell (1994,5) has collected different paradigmatic assumptions of qualitative and quantitative research (Figure 2) which show the different basic natures of these research types. There are differences at the ontological, epistemological, axiological, rhetorical and methodological level.

Question Quantitative Qualitative

Ontological What is the nature of reality? Reality is objective and Reality is subjective

Assumption singular, apart from multiple as seen by

researcher participants in a study

Epistemological What is the relationship of the Researcher is independent Researcher interacts Assumption researcher to that researched? from that being researched with that is being

researched.

Axiolocical What is the role of the Value-free and unbiased Value-laden and

Assumption values ? biased

Rhetorical What is the language of the Formal Informal

Assumption research ? Based on set definitions Evolving decisions Impersonal voice Personal voice Use of accepted Accepted qualitative

quantitative words words

Methodological What is the process of the Deductive process Inductive process

Assumption research ? Cause and effect Mutual simultaneous

shaping of factors Static design- categories Emerging design - isolated before study categories identified

Context-free during research

Generalisations leading to process prediction, explanation, and Context bound understanding Patterns, theories

Accurate and reliable through developed for validity and reliability understanding

Accurate and reliable through verification

Figure 2. Paradigmatic assumptions of qualitative and quantitative research (Creswell 1994, 5)

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In this study the key phenomenon under study, development of health-promotional foods, has an empirical background. The objective of the study is mainly to describe and to understand and not so much to explain and to predict. For these reasons it is quite natural that a qualitative research approach is adopted. This is, however, not to say that the research meets in all aspects and all levels the assumptions that are set for a qualitative approach.

The assumptions are very complicated in a deeper sense. It is very easy for example to state simply that the reality where foodwebs exist is subjective and multiple. Does this mean that there are no objectivity and singularity in that reality? A more realistic stance is to assume that some parts of the reality can be considered as objective and others subjective. An example of the former would be many events in the natural environment. In the long run it is probable that many parts of the reality that are now considered as objective, will turn out to be more subjective and vice versa. In this study it is realistic to assume that reality consist of both objective and subjective elements.

Theory has a different role in qualitative than in quantitative research. In the former theory is used to help understanding and not so much to explain or predict. In qualitative research there are no similar procedures for testing theories as for example in the positivistic tradition (see e.g. Popper 1965, 241-242). In qualitative research the relationship between the research process and the following theory are close to each other (see specifically grounded theory: Glaser and Strauss 1967, Strauss and Corbin 1990) whereas in quantitative research theory is typically a result of a study. The boundaries are, however, not very distinct. For example it can be thought that even in the case of qualitative theories there are types of falsification procedures although in more discreet forms than in the positivistic tradition. As this study is more of the qualitative type, this means that the theories in the study are primarily used to help understanding the phenomenon under research.

In qualitative research verification is a very important methodological procedure. Miles and Huberman (1994, 11) describe the spectrum of verification: “Verification may be as brief as a fleeting second thought crossing the analyst’s mind during writing, with a short excursion back to the field notes, or it may be thorough and elaborate, with lengthy ar- gumentation and review among colleagues to develop ”intersubjective consensus”, or with extensive efforts to replicate a finding in another data set.”. As the assessment of the research in concerned Creswell (1994, 158) recommends that also in qualitative studies both validity and reliability considerations should be distinguished between. A specific evaluation of these themes, concerning empirical research, will take place in section 4.4.

1.3.2. Strategic choices in the study

The qualitative research approach was chosen because it responds better with the objectives of the study than a quantitative approach. Because of this many alternatives that are of strategic nature are already fixed. However it can be thought that even within the qualitative research type there are choices that are of a strategic nature.

In qualitative research it is not necessary to separate theoretical and empirical parts in a study because the theoretical and empirical are interlinked (Creswell 1994). However, in this study such a division is made. Theoretical themes are being treated mainly at the beginning of the study. From that perspective the study is not quite in the mainstream

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under the qualitative approach. In principle this could be done in a reverse order. First going into the empirical phenomena, then relating that to theoretical subjects. Specifi- cally this could be justified, as the whole idea of specific health-promoting foods is not very well established. There is considerable obscurity concerning the subject and there are various views about it.

It is assumed that the prior knowledge that the researcher has of the subject area justifies the chosen approach. Consequently more emphasis will be given to examining the development of products. It is recognised that in the chosen procedure, there is a danger that if those theory-based frameworks that are constructed are biased, the validity of the study will suffer. An a priori conceptual framework can also lead to a situation where the understanding of the phenomena becomes subordinate to the testing of a framework.

The evolving decisions made in the study make it qualitative in nature. It is also assumed that there are weaknesses in causal structures. A probable outcome is that there are independent elements that can initially be linked together with the relationships between them not being very clear. The subjective elements in the study mean that certain choices can be made on an inductive basis without thorough explicit explanation because the choice is so obvious from the perspective of the researcher. This of course brings with it the risk that important decisions are made too intuitively without taking into consideration the demands of the target group for the study. Specifically an area where the subjective approach is prevalent concerns the area of traditional food product development. Refer- ences to this area are very much based on the experiences of the researcher in the respective area and not so much on any theoretically based approach concerning food specific development processes.

Within the qualitative approach there are many research traditions that use different kinds of research methodologies (see e.g. Denzin and Lincoln 1994). A case study was considered to be a viable option. The choice of a case study is, however, not a methodological choice. The case study approach can be used both in quantitative and qualitative studies (see. e.g. Stake 1994, 236). What is typical for a case study is that it makes possible the approach of the phenomena from different angles, use data from multiple sources and study selected issues in detail and depth (Patton 1990). These features support the purposes of this study. Therefore the case-study approach was chosen as the empirical phenomenon was studied. It was also discovered that industrial network approach favours qualitative methodologies and that case studies are commonly undertaken (Araujo and Easton 1996).

When it comes to case studies there are several ways a case can be defined. In this study a product-based approach is considered as the most suitable option. There are certain requirements concerning these product cases. It is expected that products are commercially successful and there is already some history behind the products. Then it will be possible to approach the subjects more holistically and to examine the specific development processes and to identify respective foodwebs.

1.3.3. Structure of the study

Chapter one is an introduction to the study. In chapter two a short exploration is made of the area of foods in order to position health-promotional foods within the domain of foods. The basic characteristics of foodwebs are introduced in chapter three. The

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construction is based on the model of industrial networks, which is adjusted in order to make it more responsive to the phenomenon under study. In chapter four the questions relevant to a case study are considered. The choice of the cases is justified and factors concerned with the validity and reliability are discussed.

In chapter five the individual cases are described applying the frameworks developed in chapters two and three to guide the analysis. In chapter six a more general perspective on the phenomenon under study is taken and some initial generalisations concerning the foodweb and the development of the respective products are made. In the concluding chapter general conclusions are made, practical implications are presented, possibilities for the generalisations of the foodweb framework to other contexts are discussed, and some suggestions for further research are examined.

The structure of the study could also be divided into three parts based on the object of interest (Figure 3). First, there is the level of products that is specially centred around health-promotional foods. Secondly, there is the environment of these products. Thirdly, there is the relationship between the products and their environment that is of special si g- nificance to the development of the products.

Environment of health-promotional foodstuffs

Health- promoting foodstuffs

Figure 3. Objects of interest in the study

1.4. Central concepts in the study

The central concepts in the study are foodstuff, health-promoting foodstuffs, a foodweb, and the development of a product. The starting point of the study directs the contents given to the concepts. It is assumed that the concepts are linked to each other so that they together cover the phenomena under study. Concepts are more related to the phenomena under study than to how other researchers have possibly defined them. The numbers in parenthesis in headings indicate the chapter or section in which the concepts or related subjects are further examined.

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Foodstuff (or a food product, foods)

A foodstuff is a product that is given a foodstuff status in a social context. It is not expected that a foodstuff can be defined based only on its material properties (e.g. nutritive value), but the status of a foodstuff is influenced by many social and individual factors. It is assumed that foodstuffs are produced industrially and they are commercially available.

Health-promoting foodstuffs (2.2.1, 2.2.2)

Health is limited mainly to bodily health and it can be characterised as the balanced state of the body. Health-promoting foodstuffs contain positive health relevant factors that are of a major significance for the identity of these foodstuffs. It is expected that these factors have a scientifically validated basis.

A distinction is made between health promoting qualities and the safety of foodstuff.

Health-promotion relates to specific intended effects whereas safety concerns also its re- alisation. For many reasons there is typically only a probability of reachieving the intended effects.

Foodweb (3.2)

A foodweb can be defined as a network in which foodstuffs are being developed.

What is typical in a foodweb is that interaction in one part of a foodweb affects interaction in other parts of the foodweb. A mutual interdependency prevails in a foodweb

Development of a product (3.2.2, 6.2.)

A product in this study is not only limited to concrete exchangeable objects that is typical in the market context. A product exists already on an idea level and at the stages where there are a lot of uncertainties concerning its possible market value. Development of a product is a continuum and no final products are assumed.

Development is assumed to take place in a network type of a context where there are several more or less independent actors and many other factors that affect the development. It is assumed that the development of a product is partly based on purposeful activities and partly based on emerging opportunities.

1.5. Significance of the study and the audience

The main significance of the study is expected to be a new holistic view on the development of health-promotional foods. The actual development process is not very well taken into consideration in traditional market views. Typically products are seen either from a macro level (national, international), in which case the actual development process is not seen at all, or from a micro level (within organisation), in which case only part of the development process is taken into consideration. Foodweb can flexibly cover parts of both the traditional microenvironment and macroenvironment. A food chain approach has in principle a similar type of broad coverage. However, it very much emphasises the distribution related matters of physical products. It is therefore a more partial view on the development process than that based on a foodweb.

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The study also contributes to food studies in general by constructing a new reference point for foods. An attempt is made to define dimensions and boundaries that are specifically relevant to health-promoting foods. It is also evident that the development point of view is broader than that used in a traditional in product development context. This is thought to bring new insights to the development of new food products.

The study also makes a contribution to network studies, specifically to industrial network studies. Even though the subject under study is industrial, the perspective of the study differs from previous network studies. The concept of an industrial network is typically the same as the concept of a network of industrial organisations, whereas in this study the starting point is different. The role of a product has more significance. This means that both the structure and the processes of a network will be seen from a different point of view. This can be expected to bring new insights concerning industrial networks.

The main audience of the study consists of researchers interested in the area traditionally treated under the theme of markets of health-promoting foodstuffs. It is also probable that there are elements in the study that will be of interest to researchers of new foods in general. Due to the specific point of view to industrial networks it can be assumed that the study also brings up factors that are of interest to those doing research in industrial networks applied to certain specific context.

2. Understanding health-promoting foods

2.1. Background of health-promoting foods

In the following the background of health-promoting foods will be examined. It needs to be pointed out that the starting point in this study is not health and health promotion but foods. On the other hand it can be anticipated that health-promoting foods have characteristics which make them different from traditional foods. To bring out the problematic related to health-promoting foods, a more broad approach than that typically used in a food context is needed. A new category of foods, called body-centred foods, is introduced and some key questions linked to them are described. The category is then examined based on the idea of functionality of foods. According to this foods are not an end product themselves but they contribute to certain bodily objectives. In this respect body- centred foods can be considered to be functional.

2.1.1. Body-centred foods

Body-centred foods consist of foods in which the material relation between the foods and a human body is specially emphasised. The focus on the body means that for example foods whose use is based mainly on such social aspects like rituals are excluded. Body- centred foods are examined from three points of view: natural, social and individual (Figure 4). It is assumed that thereby different characteristics of body-centred foods can be revealed.

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Natural Social

Body-centred foods

Individual

Figure 4. Body-centred foods seen from three points of view Natural point of view

The natural point of view is linked to the biologic-physiological environment. Foods carry materials and sources of energy from the environment to a human body. Usually foods are taken orally. There is a continuous dependency on the environment because the ability of the body to store materials and energy is limited. To emphasise the many aspects of this dependency, foods that are ingested can be considered to make up a flow of foods. This covers different aspects than, for example, what is included to the concept of a diet, which usually refers to the real or targeted selection of specific foods ingested in a certain period of time.

A physical food flow can be divided into three phases in relation to the body (Figure 5).

A relationship between a food and the body is formed in a phase called the pre-oral phase. In it foods and the body are not yet in direct physical contact. In the second phase, called the oral phase, foods enter the body stimulating sense organs located in the mouth and its proximity. The following phase, here called the post-oral phase, begins as foods pass to metabolic processes through the gastric system. Typically the first two phases are separated from the last one in a food context. In this study a more holistic view is chosen and the post-oral phase is emphasised.

Food flow leads to body reactions (Figure 5). Every food causes some reactions in the body. Here physically recognisable reactions are of main interest. Examples of such reactions are the process that takes place as foodstuff in an oral phase stimulate the recep- tors of sense organs or the process by which a substance in foods contribute to a metabolic process. Typically this takes place in reaction chains. For example, the above mentioned sense organs are linked via the nervous system to the human brains in which mes- sages integrate in complicated neurophysiological processes (see e.g. Booth 1994,164- 172). The body reaction is then perceived at the cognitive level. Metabolic processes in the body are all linked to different chains of reactions that lead for example to visible movements of the body.

Body reactions can by nature be positive or negative. An example of a positive reaction is a physiological change that enhances body health. An example of a negative reaction is an allergic reaction by the body. There are many different mechanisms that link foods to body reactions and reaction chains. Some body reactions are directly perceivable some are perceived based on indirect information that is acquired for example by different

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measuring devices. In the case of body-centred foods body reactions are central when it comes to assessing the value of foods.

HUMAN BODY

FOOD FLOW pre-oral oral post-oral BODY phase phase phase REACTIONS

Figure 5. Food flow and body reaction

Body-centred foods are not only based on bodily needs but they also depend on raw materials that are available and the technological possibilities to produce foods. There is always a dependency on nature as food products are concerned. In an underdeveloped food system it is typical to rely on products that are spontaneously being produced by nature.

Foods are more or less given by nature because know-how is limited and the technological possibilities to intervene in natural processes are restricted. In a developed food system controlled intervention in natural processes at many levels is a typical feature which gives more predictability to the system.

The social point of view

The body depends on its social environment. Changes in that environment have direct consequences to bodily needs. An example of that are changes that take place at work.

For example it is well known that the need for energy content of foods has been continuously decreasing, as physical strength at work has become less important. At the same time the significance of mental performance is growing. There is a need to achieve a high level of mental performance at work. For potential new foods this means that they are expected to cause different body reactions than the old foods. Even energy is still needed but with different emphasis. In old foods the focus was on energy for muscles whereas in the new context it is more a matter of energy for the brains.

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In the social context the differences between social classes have always been of a concern. According to Bourdieu (1984) traditional social classes exhibit differences in taste which can be seen as different preferences for foods. However, it is argued that even there are foods, which have a socially differentiating role, it is more probable that under- neath the social classes lie many other factors. It is not very probable that, for example, in the case of health-promoting foods social class would be found to be the most important explanatory factor of the consumption. Such factors like nationality, age, sex, lifestyle, and psychological factors are probably as valid bases as traditional social class. It seems also that only seldom food related matters lead to convictions where foods strongly differentiate social groups (an example of such an outcome is vegetarianism).

Taste can be examined also in a more limited sense in relation to the oral phase. Taste consisting of such elements like flavour and texture of foodstuff. The taste of foods in the oral phase has always been a major determinant of their value. But the post-oral influence of foods is also important. It is very probable that for example the increasing preference for less fat containing foods is to large extent based on the fear of negative health consequences that excess intake of fat may have. This has happened even if the taste of new low-fat products initially were not preferred. Those products have then become preferred products for the majority of consumers. This means that there is link between the post- oral qualities of foods and oral qualities.

An important basic determinant in a social context concerns the value given to the body.

It is from this value that also the value of foods derives. What makes the question difficult is that there is not any single body determinant. Even on a materialistic level the value of the body is far more than for example the value of its physical parts. In a society the value of the body can indirectly be assessed based for example on the amount of resources that are allocated to sustain the health of bodies. Body value can also be assessed from an instrumental point of view. The body can be used, for example, to give aesthetic pleasure to its owner or to improve one’s performance in a task. It seems that taking into consideration different aspects the overall value of the body is increasing in modern societies.

It could be thought that the increased value of the body means that automatically the value of foods is also increasing as body and foods are so dependant on each other. Ho w- ever, this is not always the case. It is obvious that although in earlier societies most of the materials ingested could be called foods in a modern western society a diversification has taken place where foods form just one category of ingested products.

As an example of such a development we could think that there are consumers who are worried about the optimal intake of vitamins. They know that the concentrations of vitamins vary in foods and therefore they may prefer to take vitamins supplements in order to make sure they insert right amounts. If the intake of separate vitamins is the first priority and foods come as second, the consequence of this is that actually a consumer should eat foods containing no vitamins, to avoid obtaining an excess of vitamins. The more there are similar developments, the more probably the value of foods will decrease, as part of the previous value of foods is actually transferred to other products.

In a social context there is a question of responsibility. Who is responsible and to what extent for an individual’s body. For example, is it an individual him/herself or society?

We could assume that there are two extreme alternatives. One is a case where society is fully responsible of an individual’s body. It would resemble a situation where society

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actually owns the body and an individual has mainly a right to use his/her body. In order to preserve the societal asset an individual would have to obey strict rules of behaviour concerning his/her body. That could include only specific officially approved foods to be eaten under controlled conditions.

In another alternative society is based on extreme individual decision making. An individual is solely responsible for his/her own body. Whatever an individual desires concerning his/her body is always supported by society. On a food level this would mean extremely diversified foods. Foods could contain any ingredients at any levels. In reality there are no such extremes but in societies the responsibilities are typically shared. Con- sequently there is more or less freedom for different kinds of foods.

The individual point of view

First a division can be made between the human mind and body which together can be considered to form an individual⁷. The relationship between them could be described as that between a consumer and a customer. The mind is a customer who typically decides what is available for consumption. The body then utilises foods in a very physical sense (or rejects them if there is for example a severe negative body reaction). There is a mutual interdependence between the mind and the body. The relation, however, is not always in balance and there can be a constant tension between them.

The power of the mind is revealed in the fact that despite the body expressing symptoms of a need for food, a mind can decide that food will not be eaten. This can be taken to its extremes for example in a hunger strike. After a certain period of time the feeling of hunger disappears. If that state continues it leads to a situation where even if the mind would prefer to eat, it is not any more possible because the body has taken the lead. This results finally in the destruction of the body. Besides hunger strikes, which are conscious decision, there are at least partly unconscious psychological (and social) reasons that can lead to similar types of situations (e.g. bulimia, anorexia). These examples show that there are limits to conscious decision making and that there are unconscious reasons that direct the intake of foods.

If an individual can even destroy his/her body by a conscious decision it is easy to understand that decisions can be made where the health of the body is not the first priority.

Even in less dramatic conditions there can be a willingness to sacrifice the health of the body. The reason can be for example that pleasure is valued over health or that there is a serious attempt to perform in a task (e.g. within sport) even knowing that there is a risk to body health. Foods are not necessarily an outside factor. They can be more or less important instruments in an attempt to attain certain goals. The more committed an individual is the more probable it is that all the factors, including foods, are taken into consideration.

Even if the promoting of health is the dominating value for an individual it is not self- evident how this goal can be achieved. What makes the situation difficult from an individual point of view is that there are limitations in direct communication between the mind and the body. Even if an individual prefers health-promoting foods, the information system within the body has a very limited capability to provide this directly. Positive

7 In a sociological context they are typically united (see e.g. Falk 1994)

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health active properties cannot usually be seen or tasted. Indirect information is therefore needed.

Every individual can be considered unique when it comes to both body and mind. This means that from an individual point of view the actual scope of products valid as foodstuffs can be very limited. We could think of an individual who rejects most of the common foods. There can be negative factors emerging at any phase – pre-oral, oral or post- oral -for a food flow, which alone or together make us reject foods. In the middle of an apparent abundance such an individual confronts a scarcity of foods. The more all food related needs are taken into consideration, the more probable is the situation that can be expressed by modifying the Malthusian thought: the requirements for foods grow on a geometric scale whereas the possibilities to meet them grow only on an arithmetic scale.

2.1.2. Functionality and body-centred foods

In the previous chapter the concept of body-centred foods was introduced. They were defined as foods in which the relation to a human body was of special importance. This relation is broader than the traditional nutrition based relation. Body reaction was used to describe the outcome of the influence of foods. It was also seen that the body is instrumental towards certain goals. When foodstuffs specifically support the attainment of these goals they can be called functional foods.

The following categorisation of functional areas has been adapted from Winkler (1998, 186-191), who considered different kinds of foods (Disease-Specific Foods, Risk Group Specific Foods, Foods to Reduce the Effects of Ageing, Performance Foods- Physical, Performance Foods- Mental, Mood Foods) and not directly functional areas. In this section it is not so much the foods itself than the various areas that are of interest. The following categories are examined: nutrition, health, performance, pleasure, and esthetic. It is not argued that this is the most valid categorisation including all the areas and being exclusive within categories. The subject is approached in a materialistic manner so that the characteristics of the physical substances linked to the respective areas are emphasised.

Nutrition (nutrition functional)

Nutrition is of specific significance in a food context because usually health related subjects of foods are treated within the domain of nutrition. Foods and nutrition have traditionally been closely linked to each other. This in turn means that questions concerning foods are often of direct significance when it comes to nutrition. In the following some basic questions are examined at a general level without trying to go deeper into nutrition as a science or an actual field of inquiry.

A question can be asked what is the relationship between nutrients and foods? To what extent are they separable and to what extent interdependent? If the former case is true, foods are mainly carriers of nutrients. If there is interdependency, the question can be asked to what extent a food context matters? Probably not all foods are similar. One context is better than another context from a health point of view. In such cases nutrients can not be viewed only as substances in the reduced (e.g. chemical) form. They should be viewed as a combination of a specific substance in a certain context. In order to produce

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such a nutrient it means that something needs to be taken away from a specific food or something has to be added to a certain reduced natural (or synthetic) substance. If this is true, then it can be asked to what extent the current way in which nutrients are described takes these factors into consideration. Should not for example a vitamin then be a combination of a chemical substance in a certain context?

Within nutrition a change has taken place from nutrient levels needed to prevent defi- ciency diseases to levels needed to reduce the risk for chronic disease and achieve optimal health and well being (Berner et all 1999, 91). This usually refers to the development within the traditional well-established nutrients. There are, however, many questions concerning new possible nutrients: What are the criteria for a nutrient? Is it more its essentiality in specific bodily metabolism than its contribution to bodily health that matters? Do nutrients have to be exclusive in that no other substance can have similar effects? How will the status for a new nutrient be granted? Because of the high esteem of nutrients in a health context it can be anticipated that the borderline between nutrients and other substances that have a positive health-promoting effect, will attract more interest in the future.

There is one important question when it comes to the relationship between foods and nutrients. Is it necessary that new nutrients can only be found in traditional foods? If total scientific evidence shows that a substance of non-food origin has a nutrient like contribution, would it be accepted as a nutrient? Can we assume that all the nutrient potential substances are already in foods? It would seem rather unlikely considering the basis that is behind the original selection of foods. The emergence of foods has traditionally been influenced very much by supply related questions. Bodily needs are only one aspect that is taken into consideration.

Health (health-functional)

Health and nutrition are not exclusive categories. The aim to improve the health of the body is also the key aim in nutrition. Actually nutrition should be considered as part of the health and nutrition functionality should be included in health-functionality. This separate treatment is however justified because nutrition has such a strong a position in the food context.

The typical difference between health and nutrition concepts is that nutrition refers mainly to the objective biologic-physiological basis whereas health typically includes also psychological elements and an individual basis for assessment of health status (see e.g. Blaxter 1990, 4-12, Erikssson 1976). Even within the more objective body sphere the concept of health covers a broader field than the concept of nutrition. An individual’s health is impacted by many diverse factor such as genetics, mental state, immune system, activity levels, environment and diet (Berner et al. 1999, 93)

Following the same materialistic approach as in case of nutrition we could assume that there is a special health product category in which the core of the products would consist of healthients. Healthients would consist of all those material substances that have been shown to have a positive effect on health. When scientific evidence is required the scientific basis has not to be only natural sciences but also for example psychology because health has a subjective element in it.

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The actual content of a foodstuff could be described as consisting of four different kinds of factors (Figure 6). Factors having positive health effect are part of the above mentioned healthients. Foods typically have also factors that have a negative health effect.

Typically there is tendency to remove, eliminate or reduce the amount of those factors (e.g. salt). There are also hundreds of factors (factors as substances) in foods, whose physiological effects are not very well known (Tansey and Worsley 1995, 52).

*Factors having positive health effect

*Factors having negative health effect

*Factors, which are neutral to health

*Factors, whose health effect is not known

Figure 6. The content of a foodstuff in relation to health

Potentially it could be thought that if the factors and their contribution to health are known, a health value of a foodstuff could be determined. A food flow within a certain time period would consist of different kinds of foods and their related health factors. It would be the aggregate of those factors that would be of significance. A health-balance could indicate the total effect on health when the positive and negative factors were taken into consideration. In practice there are many difficulties: all the factors are not known, they are interrelated and both the food and the body contexts are also of significance.

There are other differences between nutrients and healthients. Nutrients are typically elementary raw materials used for metabolic processes in the body. They support the self-sufficiency of the body. Healthients can also be secondary products that are produced by the human body but not for example in optimal amounts from the health point of view. Within healthients there is a specific category of products - medicines. They are products that are justified based on their effect on bodily processes; their origin or natural existence in the body is only of secondary concern.

It can be asked to what extent foods differ from medicines. Here the substance itself is not a valid starting point. The difference can be assumed to originate from different starting points when it comes to a bodily state. In the case of foods it is typical to assume that the body exists in a self controlled state that is close to a balance (homeostasis). The purpose of foods is to support this state by providing raw materials for continuously re- petitive processes. In the case of medicines the starting point is usually a significant de- viation from this balance. Typically the purpose is to restore the balance using more or less strong outside controls.

This is a strongly simplified differentiation. There can hardly be an exact line between these areas. However, it brings up some new questions. Some negative factors in foods can actually lead the body away from balance. In this sense foods can be considered even as opposites to medicines. On the other hand there can be factors in foods that support the recovery of this balance. Or recovery can be linked to different combinations of foods and medicines.

It can be assumed that there is a grey area where the body is not in full balance but not significantly out of the balance. It can also be assumed that the scope of this grey area increases the more we know about the body. Now it can be asked who takes control of this grey area? What usually happens is that as soon as a specific bodily condition is

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given a status (e.g. a disease status) in the medical context, the role of medical system increases and the role of traditional food system decreases. There are not usually ways that food system could define its domain when it comes to these new health questions.

Actually the medical system is already dominating the food area, if nutrition is considered as just one area of medicine (see e.g. Rayner 1998, 175). Accordingly, nutrients would then be a specific product category within medicine. This does not mean that foods would be seen as being the same as medicines because within medicine there are also other product categories than medicines. In many respects health-promoting foods could then be comparable with vaccines based on their aims. It seems evident that even though foods have been separated from medicines on a product level there are still strong uniting links.

In health products the characteristics of foods and medicines are typically mixed. As an example we could think of a situation where there is a bodily unbalanced state that is permanent (e.g. due to genetic reasons). As a result of this there are specific substances that needs to be taken daily to support the overall balance of the body. This is a food type of a property even though such products would typically not be included in foods. To what extent foods can be extended to the area of medicines or medicines to the area of foods is a question that has no simple answer and there are probably no definite boundaries. Despite this an attempt is made to characterise foods, health products and medicines (see Figure 7). In the figure some features that typically differentiate the product categories are presented. It is however obvious is that there is a lot of overlapping between these product areas.

Foods Health products Medicines

(e.g. toothpaste) Bodily

purpose continuity prevention restitution Focus unfocused generic focus specific focus Effect mild moderate strong

Value

assessment sensoric(hedonistic) information based advantages/disadvantages

Authorisation average consumer informed consumer professional supervision Product form traditional consumable reduced

Figure 7. Typical characteristics of foods, health products and medicines compared

Health-Functional Foods in Foodwebs : Developing Products in Food Specific Networks

University of Helsinki

Department of Economics and Management Publications No 30, Food Economics

Helsinki 2001

Jarmo Markula

Health-Functional Foods in Foodwebs

Acknowledgements

Health-Functional Foods in Foodwebs

Contents

1. Introduction

1.1. Health-promoting foods – a new research approach is needed

1.2. Objectives and the scope of the research

1.3. Methodological questions and structure of the study

1.4. Central concepts in the study

1.5. Significance of the study and the audience

2. Understanding health-promoting foods

2.1. Background of health-promoting foods

2.1.2. Functionality and body-centred foods